Envision Healthcare Facing Securities Suit After News Article Exposes ‘Illicit Practices’

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Envision Healthcare Corporation and 11 of its officers and directors are facing a proposed class action filed back in September by a shareholder who claims the defendants failed to disclose to investors that the true source of Envision’s recent success was its “illicit” business practices. From the complaint:

“This action involves a fraudulent and illegal scheme by Envision and its senior executives to artificially inflate Envision’s stock price by ordering tests that were medically unnecessary, admitting patients from the emergency room into a hospital for financial rather than medical reasons, and billing for the most complex, expensive level of care in unwarranted situations. Furthermore, Envision engaged in ‘surprise billing,’ in which patients who sought treatment at in-network facilities were treated by out-of-network physicians and subsequently billed at higher rates.”

Despite these alleged practices, the defendants assured stockholders that Envision’s growth was due to “its integrated service offferings, differentiated, data-driven processes to recruit and retain physicians, scalable technology and sophisticated risk management programs,” the suit reads.

On July 24, 2017, according to the complaint, The New York Times published an article about the company exposing the aforementioned allegations. In response, Envision’s stock prices fell 3.72 percent, the suit claims. Approximately two months later, the plaintiff says the defendants announced organizational changes among the company’s top executives, causing stock prices to supposedly decline another 10 percent.

The suit argues that the defendants’ misleading statements about the source of Envision’s success artificially inflated stock prices and caused investors significant harm when the alleged truth was revealed.